Bipartisan House pair seek to streamline tax breaks for education

A bipartisan pair of House members is rolling out legislation Wednesday to streamline tax breaks for education, according to a summary obtained by The Hill.

The bill from Reps. Diane Black (R-Tenn.) and Danny Davis (D-Ill.) would consolidate four separate tax incentives for higher education into a single preference, the American Opportunity Tax Credit.

Both Black and Davis are members of the tax-writing Ways and Means Committee, and their legislation grew out of working groups the panel held this year that sought to lay the groundwork for a fundamental rewrite of the tax code. Black and Davis were the chair and vice chair of the education working group.

The lawmakers’ new American Opportunity Tax Credit could be used to offset tuition and other higher education fees, and would be available to students for up to four years at a qualifying school.

The credit would be partially refundable – up to $1,500 – and would start to phase out for families making more than $86,000 a year. The first $2,000 of college expenses would be eligible for a 100 percent credit under Davis and Black’s proposal.

Democrats pushed hard to extend the current American Opportunity Tax Credit, now in place through 2017, in fiscal cliff negotiations last year. The current provision also includes a 100 percent credit on the first $2,000 of expenses, and would start phasing out at $160,000 for families.

Ways and Means Chairman Dave Camp (R-Mich.) has pointed to the efforts of Davis and Black as a bright spot in the panel’s attempt to broadly overhaul the tax code.

Committee Democrats generally complimented this year’s working group process, but have recently urged Camp to include them in tax reform negotiations. Ways and Means Republicans have recently been huddling on their own to discuss the path forward on a rewrite of the code.

Camp, who is facing his last term with the Ways and Means gavel, has made tax reform his overriding goal, as has Senate Finance Chairman Max Baucus (D-Mont.)

But as the current budget negotiations have illustrated, Democrats and Republicans remain deeply divided on revenue increases, showing the challenge for both chairmen.